CHAPTER II

REVIEW OF RELATED LITERATURE AND RELATED STUDIES

This chapter presents the related literature and studies after the thorough and
in-depth search done by the researchers. This will also present the synthesis of the
state-of-the-art, gap to be bridge by the study, theoretical framework, theoretical
paradigm, conceptual framework, conceptual paradigm, to fully understand the
process of this study, and lastly the definition of terms for better comprehension of
the study.

RELATED LITERATURE
The Philippines is not just a country known for its rich natural resources and
culture, its own coffee industry is also thriving in the global trade and business. In the
history, the Franciscan friar in the year of 1749 is said to be the first one to brought
coffee in the country. However, an unfortunate event happened as the coffee rust
disease destroyed crops at the end of the 19th century. By the end of the Spanish
colonization, the Philippines was a top coffee exporter but several factors like lack of
government and urbanization made it extinguished.

Today, the largest coffee plantation in the Philippines is situated in a

mountainous region near the town of Alcoy in the southern part of Cebu City in about
700 meters above sea level. The Robusta Coffee Plantation is the most popular in
the country having plantations in Bukidnon, Misamis Oriental, Sultan Kudarat,
Bataan, Bohol, Cebu, Compostela Valley and Palawan and various other regions
and the Nestle Company buys a large percentage of these harvests. “Much of the
coffee grown in the Philippines (about 85%) is the lower quality Robusta that is
resistant to different kinds of pest and disease which is largely used to produce
instant coffee. About 5% of coffee production in the Philippines is the higher grade.
Arabica coffee which is known as Kapeng Tagalog that is considered to be the best
coffee bean in the country because of its excellent flavour and aroma, while 7% is
the Excelsa varietal which is resistant to drought. About 3% of Philippine coffee is
the Liberica Coffee varietal and known as KapengBarako, favored for its ability to
grow in a variety of soil types.” (Philippines Coffee, Espresso & Coffee Guide 2011)
 In 2011, the production of coffee was estimated at 88,526 metric tons. This
was 6.35 percent less from the previous year’s level of 94,536 metric tons. The
number of bearing trees was declined by 1.65 percent. Areas planted with coffee
beans also declined by 1.43 percent which is 119,657 hectares from 121,399
hectares in 2010. The typhoons Mina, Pedring, and Quiel who brought strong winds
have aborted the development of berries in Benguet and La Union. Recurring rains
adversely affect the production in Sulatan Kudarat. There were reports of crop
shifting to Señorita banana in Compostella Valley and to rubber in Zamboanga City
while robusta remained the major variety with 71.14 percent share in the 2011
production. Region 11, Region 12, and Region 15 are the top producers of coffee in
2011 with respective shares in the national product of 30.94 percent, 23.13 percent
and 12.31 percent

There are many processors of coffee in the country. A large number include
local small and medium processors of roasted beans and ground coffee. The largest
soluble coffee processor is Nestle Philippines, Inc., which accounts for 80 percent of
the instant coffee markets in the Philippines. It is followed by Universal Robina
Corporation and Commonwealth Foods Corp Coffee is processed into various
product forms: green beans, roasted beans, ground coffee and instant coffee. Green
beans are used by industrial users, for further processing into roasted beans, ground
coffee or instant coffee. Roasted beans are intended for grinding, and are highly in
demand among industrial buyers, and to some extent, institutional users. Ground
coffee is derived from roasted beans which have been crushed; it is mainly for
brewing and has a better flavor than instant coffee. The markets include industrial
buyers, institutional users and households. Instant soluble coffee includes pure
soluble coffee, single-serve sachet mixes, 3-in-1, mixtures and ready-to-drink. It is
easy to prepare and has a lower price compared to ground coffee. The big users are
households and institutional buyers. There are also 5-in-1 and 7-in-1 coffee variants
with added ingredients which present themselves as having some health benefits.
There is also specialty coffee, which is made from the high quality green beans
roasted and brewed according to well-established standards. The specialty coffee
products include Arabica blends, organic coffee, Civet coffee (Alamid coffee), etc.
which cater to niche markets. Trade consists of raw or green coffee unroasted,
ground and unground roasted coffee, other than roasted and unroasted coffee,
extracts, essences and concentrates of coffee. The country has been a net importer
of coffee since 1997.

The growing number of specialty coffee shops and foreign brands contribute
to the continuous increase in the country’s imports of coffee (raw, ground and
unground, other than roasted and unroasted, extracts, preparations, primarily single-
serve sachets) posted substantial increases over the past 20 years. Imports in 2011
were dominated by unroasted green Robusta, and extracts, essences and
concentrates of coffee, which accounted for 39 percent and 34 percent of the total
value of coffee imports, respectively. Preparations with a basis of coffee followed
with 20 percent and unroasted green Arabica with six percent. The bulk of value
shipments (raw, ground and unground, other than roasted and unroasted, extracts,
preparations) came from Vietnam at US$50 million or 42 percent. It was followed by
Indonesia at US$25 million or 21 percent, Malaysia at US$22 million or 18 percent,
Thailand at US$11 million or 9 percent, and South Korea at US%$35 million or 4
percent. On the other hand, based on UN Trade map statistics, Philippine imports of
coffee amounted to 24,200 tons in 2011 valued at US$ 55.9 million. Exports In the
1980’s, the Philippines exported as much as US$ 100 million a year of coffee beans
until the collapse of the International Coffee Agreement in 1989 following the drastic
fall in prices due to an oversupply in the world market. During the past two decades,
exports were highly variable. In 2011, volume stood at 405 tons, down by 30.7
percent from 2010. On the other hand value increased by 8.5 percent from US$ 1.5
million in 2010 to US$ 1.6 million in 2011.Of the total export value in 2011, extracts,
essences and concentrates of coffee accounted for 70 percent, while ground roasted
coffee accounted for 29 percent. The leading buyers of coffee by value include South
Korea at 29%, China at 24%, and Thailand at 11%, US at 10% and Netherlands at 3
percent.

“The current high worldwide prices for coffee are helping to incentivize
increased coffee production in the Philippines. In 1989 around 130,000 hectares in
the country were being cultivated in coffee but by 2006 the acreage was just 75,000
hectares.” (Philippines Coffee, Espresso & Coffee Guide 2011). Truly that coffee
industry in the Philippines although drop in the 19th century managed to return to the
business industry. Nowadays, coffee became a very popular beverage among the
Filipino population and by this Starbucks now is the leading coffee business in the
country with many branches in Manila and other locations.

The Philippine government show its support to the growing coffee industry in
the country by the Department of Agriculture. The said department takes a step by
creating loan assistance programs, distribution of planting materials, small farm
equipment, and coffee production facilities, and farmer training in an effort to
increase the quantity and quality of the country’s coffee crop and revitalize the
country’s coffee industry.

Thru this growing popularity of coffee among Filipinos, different businessman

and those who wants to open a business in the country start establishing coffee
shops or cafés throughout the country from urban areas to the rural areas in the
different regions and provinces.

Coffee is an ideal beverage within the society. It’s good to have coffee shops
that operate on a daily basis that serves the needs of the society. Some people
needs coffee in their lives, especially the students. It is evident that students take
coffee for psychological reasons. This is to maintain mental alertness, thus highly
level of focus on the issues of concern. This is why most students of several
universities prefer coffee shops that operate on a 24/7 basis that can serve their
refreshment needs. Coffee and coffee shops plays a critical role in the enhancement
of the performance of students within the institutions.

Some students make coffee shops their meeting points to interact on common
and personal issues. It ideals to note that coffee is a component for bonding as it is a
reflection of friendship and togetherness among the students and other stakeholders.
Some people also needs coffee for biological reasons. These might include
prevention or delaying of certain diseases (Parkinson’s disease), prevention of
dizziness especially among the old population, elimination of certain types of
diabetes, and elimination of rectal cancer. “Adoption and implementation of drive-
thru services acts towards the automation of activities within the coffee shops”
(Balch, 2006).
 Aside from the good feedback of this business to the people, this type of
business is very successful in the global scale and economy. Many café and coffee
shop owners now became a large company monopolizing the global coffee industry.
A very good example of this is the Starbucks. And international data statistics shows
the growing profit in this type of business.

Based on Euromonitor International data, in 2016, coffee shops were the

fastest growing major restaurant category in terms of global sales, increasing 9.1%
from 2014-2015. Asia is where most of the cafés and largest sales increase in
specialist coffee shops can be found, totaling over 3.7 billion US dollars in new value
growth from 2016-2020. This is as compared to North America, at 3.3 billion US
dollars in growth, as well as another 1.7 billion US Dollars from Western Europe over
the same period.

US$2.2 billion of this growth will come from China alone, where Starbucks is
leading the charge for a rapidly growing. South Korea will contribute another US$715
million in new specialist coffee shops growth from 2015-2020, driven in large part by
local chains rather than international brands alone.

The world’s best coffee shops according to a The Telegraph are Truth Coffee
of South Africa. There are few cafes in the world as stunning as Truth, a “steampunk
inspired” artisan coffee shop that is filled from top to bottom with metal piping and
quirky old machinery. But people don’t just flock there for the décor. The coffee shop
all hand-roasted in a vintage cast iron drum, and the company supplies many of
South Africa’s top hotels; Coffee Academics in Hong Kong. This gorgeous.
Industrial-chic space is a popular haunt for Hong Kong’s coffee heads. The team
there love trying out all the latest coffee equipment and techniques, and the baristas
are more than happy to talk to costumers through their latest concoctions; Barista,
Parlor in Nashville, Tennessee, USA. Barista Parlor is a former auto garage which
was converted into a sleek, airy coffee joint in 2012. The place just screams cool-its
owner is best buds with black keys front man Dan Auerbach, while the baristas are
all clad in loally-made leather aprons and bow-ties don’t let that put you off though,
the coffee list is one of the best and most comprehensive in the area; La
Cafeotheque in Paris, France. One of the pioneers of artisan coffee in the city of
lights, La Cafeotheque is known for its carefully-selected single estate varieties. The
homemade pastries are pretty good, too; Café, Central in Austria, Vienna.

As great competition arises in the rapid growth of different cafés and coffee
shops, owners results to new marketing strategies in promoting the business and
eliminate other competitors. Using the social media as a new marketing tool is the
new trend in promoting businesses in the internet and people.

Social media allows a wide participation and continued flow of

communication. Social media has created different opportunities especially for those
businesses who needs promotion. This allow internet users to give and get
information from each other or from different websites. It can also build awareness
which is the most common function of social media. It generates social interactions
between its users to provide information about the latest issues or topics that is
relevant to the internet users. Citizen are the basic core of social media. Without the
individuals, no one will support and actively take part in network building and sharing
of information.

The relationship between citizen media and social media can be understood
on how the citizen develop the social media tools that are available for them
whenever they mass communicate. Several millions of information exchange is
continuously happening. Example of this are social media blogs, vlogs, digital
storytelling, participatory video and more. Citizen media can be distributed via
television, radio, internet, DVD and email. There are many independent channels of
citizen media, and not all of them are bound to survive.

Social media offer new and interesting possibilities to people to express their
selves in a variety of ways. It plays a key role in promoting democratic participation
and generating well informed society.

According to ‘The Content Factory’ there are sixteen reasons why a business
need social media marketing. First, Social media posts can be used to drive targeted
traffic. Well-placed social media posts can make a difference. It’s like posting a
picture and the world saw it without the person begging for the netizens attention.
Second, using social media for business boosts its site’s search engine optimization
(SEO). Third, proper use of social media can lead to real relationship building.
Example of this is using Twitter or Instagram where a businessman can see his or
her customers update to its daily lives and what product they are buying and why. As
a result, a businessman can change his or her marketing strategy. Fourth, users are
receptive to your messages. Fifth, Social media ads allow targeting and retargeting.
One of the reasons social media is important is because of the highly customizable
nature of social media ads. A great example this are the ads of some cafés like
Starbucks. Sixth, social media can help a businessman get noticed at events.
Whether a business is sponsoring a charity fundraiser or attending a major trade
show which help promotes the business to the people. Seventh, a businessman can
respond to problems immediately using social media. If there’s a problem with your
product or service, you can see it right away. With the feedback, a businessman will
know what he should do or not. Eighth, a strong social media presence builds brand
loyalty. Ninth, competition is arising and social media will be a great help for a
businessman to beat his competitors. Tenth, the social media marketing arena is a
level playing field. Some brands may have bigger ad budgets than others so it’s a big
chance for them to be noticed by public. Eleventh, when it comes to news jacking,
social media is king. Sometimes a brand of a product is mentioned on a TV show.
Sometimes it’s not but Facebook and twitter gives a front row seat to the news that’s
becoming viral right as its happening. Twelfth, social media marketing will get you
more sales. Thirteenth, a businessman can find or can have unexpected customers.
They can find people who are looking for the products they sell and direct them to
their site. Fourteenth, using social media, a businessman can join tons of groups in
Facebook that is related to his business. Posting links and pictures in these groups
will be a great factor to influence customers in checking their business sites.
Fifteenth, people can access Facebook and any other social media sites for free.
And lastly, the return on investment (ROI) on social media ads is unbeatable.
RELATED STUDIES

The book “Social Media and its Role in Marketing” by Ms. SisiraNeti

shows how important social media is, what it’s role and relevance in marketing, what are the

benefits of it and it also shows social media’s growth and development. This study concluded

that social media takes a great part in business marketing. It helps to promote new products

and services from global or international companies up to the smallest business that needs

promotion. It was also mentioned that social media serves as a bridge for the business owners

to communicate with their customer and vice versa.

http://www.ijecbs.com/July2011/13.pdf

Christine AdhiamboOdhiambo stated in her book “Social Media as a Tool

of Marketing and Creating Brand Awareness” that social media become an important aspect

in changing the way how companies interact with customers. In this study the researcher

concluded that even though social media is more effective than some of the traditional

advertising channels it still cannot stand alone. It cannot create brand awareness or even

develop business without other forms of advertising channel.

https://www.theseus.fi/bitstream/handle/10024/44591/Christine.A.Odhiambo.pdf?

sequence=1
 The book “Social Media as a Marketing Tool: A Literature Review” by

Holy Paquette states that social networking sites are utilized to enhance or improve

company’s appeal to the customers. And this research concluded that “Social media sites are

a great stage for retailers to create an experience and retailers can use information stored on

social media sites to improve user experience with their brand”. Thus, social media is a

creative way of engaging with the customers. The researcher also stated that even the largest

company needs social media to promote their products or services through social media for

them to have active participants or customers just like the other businesses.

http://digitalcommons.uri.edu/cgi/viewcontent.cgi?article=1001&context=tmd_major_papers

Cheng-I Houtackles in her book “Study on Decision-Making for Café

Management Alternatives” (December 2013) about the different types and styles of café

businesses in Taiwan. Taiwanese prefer modern and unique styles than the traditional one for

them to attract customers. Not all of the new cafés tend to be successful but people are keep

on trying especially those who dream of entrepreneurship. However, as there are many types

of café in the market, people don’t have enough knowledge on what style of cafés are the

most suitable for them. Therefore, this study explores the decisions of companies or

individuals when choosing the style for their cafés.

http://airccse.org/journal/jcsit/5613ijcsit05.pdf

https://www.researchgate.net/publication/

228147155_Cafe_Coffee_Day_CCD_A_Case_Analysis
 Neeti Gupta stated in her research “Grande Wi-Fi: Understanding What Wi-Fi Users Are

Doing in Coffee-Shops” that the relationship between coffee shops and internet has been

emphasized through the launch of wireless hotspots or Wi-Fi, in coffee shops in America. This thesis

aims to explore the implication of Wi-Fi in coffee shops and online interviews and surveys with

internet users in coffee shops. It reviews the user experience of the Wi-Fi in four research-settings.

http://citeseerx.ist.psu.edu/viewdoc/download?

doi=10.1.1.95.3101&rep=rep1&type=pdf